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ENERGY: ONTARIO FEELS THE PRICE ISN'T RIGHT Add to ...

The Ontario government is suspending its bidding program for a new nuclear power plant over something that everyone who has made a big purchase eventually confronts: sticker shock.

Many experts say that completing a new, two-reactor station of the kind Ontario wants would likely cost at least $14-billion, and possibly a lot more if there are major cost overruns, which all recent nuclear projects in the province have had.

Any deal would likely have become the Ontario government's largest single purchase, eclipsing the final tab of $13.5-billion on the last nuclear station the province built, the Darlington plant on the shores of Lake Ontario east of Toronto. The four-reactor station was completed in the early 1990s, but projected to cost only $2.5-billion when construction began in the 1980s.

"What we're seeing in the bidding process is they're getting sticker shock when they see real prices," said Shawn-Patrick Stensil, an energy analyst at Greenpeace, an environmental group that has lobbied against the proposed purchase of new reactors, in part on cost concerns.

Although supporters and opponents of nuclear power quibble endlessly over the safety of reactors, there is little argument over the costs of building these types of power-generating stations. They're expensive and their prices always seem to be going up.

When Ontario said it was going to build a new station, it estimated the cost at $2,907 for each kilowatt of capacity, according to the Ontario Power Authority, the province's electricity planning agency. A kilowatt is about the amount of electricity capacity needed to run a typical toaster or to illuminate 10 light bulbs, each rated at 100 watts.

Those watching price trends in the industry say Ontario's figure, which was used as recently as last year in provincial documents, is unrealistically low. "Estimates of costs are going up and up at a phenomenal rate," said Steve Thomas, a professor of energy policy at the University of Greenwich in London. He said the likely cost of nuclear capacity is about $7,000 for each kilowatt, and rising. "It's just ridiculously expensive."

Given the rapid pace of cost escalation, Prof. Thomas advises those interested in buying a new nuke to do what Ontario has just done, and wait for more clarity on how much it actually costs before building a station. "I would not buy at the moment because I would wait and see," he said.

Ontario has been kicking the tires at three different nuclear companies: Atomic Energy of Canada Ltd., Areva NP and Westinghouse Electric Co. None of the companies has completed a project that would allow Ontario to have an actual figure for the ultimate cost of their power plants.

AECL was offering a new design known as an advanced Candu reactor; if Ontario were to buy one, it would be the first. Construction is just starting on some Westinghouse plants in China, and an Areva station under construction in Finland is already 50 per cent over budget, three years behind schedule and plagued by defects.

A study on nuclear cost overruns published earlier this month by economist Mark Cooper at Vermont Law School said reactor projects face rising construction material costs, few suppliers for their specialized reactor components and skilled labour shortages, among other budget-breaking problems.

Because reactor construction is so complex, delays are frequent, also adding to the costs of capital-intense projects. The study concluded that new reactors cost so much they are uneconomic and won't be constructed without large subsidies from either government or utility ratepayers.

 

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